Difference Between Fixed Cost and Variable Cost
Basis | Fixed Cost | Variable Cost |
---|---|---|
Meaning | Cost that remains constant even without the level of production output. | Cost that change according to production output. |
Impact | Costs on which the output level does not have a direct impact. | Costs on which the output level has a direct impact. |
Control | Difficult to control in the short run, but can be change in the long run. | Easy to change in the short run by changing production output. |
Other Names/Also Known as | Supplementary Cost, Overhead Cost, Unavoidable Cost, Indirect Cost, or General Cost. | Prime Cost, Avoidable Cost, or Direct Cost. |
Examples | Salary of staff, rent on office premises, and interest on loans. | Fuel, power, payment for raw materials and direct labor. |